Australia’s dollar traded 0.4 percent from a four-year low as central bank officials continued to call the currency overvalued amid a slump in iron ore prices.
The yen extended gains from near the weakest in seven years against the U.S. dollar before Bank of Japan board member Sayuri Shirai speaks today. The euro held a two-day gain versus the greenback before euro-area inflation data this week. The Aussie fell against all its major peers yesterday after Reserve Bank of Australia Deputy Governor Philip Lowe said the currency is likely to drop and the economy “has some challenges ahead.”
“Weaker commodity prices and the possibility that the interest-rate differential could narrow between the U.S. and Australia, with the Fed looking to raise interest rates next year, have been pointing to a weaker Australian dollar for some time,” said Janu Chan, a Sydney-based economist at St. George Bank Ltd. who attended the Australian Business Economists’ annual dinner yesterday where Lowe spoke.